White House
The US government has called on OPEC and its allies to raise its levels of output in a bid to keep rising fuel prices under control, as inflation in America reaches its highest yearly growth rate in 13 years.
While OPEC+ has recently increased its production levels, the White House is calling on the oil producing nations to do more, saying that not doing so could put the world recovery from the pandemic in doubt.
OPEC and its allies reached an agreement in July to increase oil supply in an effort to keep soaring crude oil prices under control.
The group’s plan is to pump an additional 400,000 barrels per day each month during August, increasing output by 2m barrels per day by the end of 2021.
The monthly increases will rise next year, as OPEC+ confirmed it has extended the deal from April next year to December 2022.
However, Jake Sullivan, Biden’s national security adviser, said that “while Opec+ recently agreed to production increases, these will not fully offset previous cuts imposed during the pandemic until well into 2022.”
Inflation
The price of goods and services in America rose again in July, albeit in line with analysts’ expectations, on high levels of pent-up demand.
The consumer price index increased by 5.4% in July year-on-year, as reported by the Labor Department, in a continuation of the levels seen in June.
The Federal Reserve, however, is reaffirming its position that inflation is transitory.
Oil Prices
At the beginning of the year, Brent crude oil was sitting just above $50, whereas at the time of writing, is valued at $71.35.
The comments by Jake Sullivan accompanied a rise in the price of Brent crude oil, the international benchmark, by 1.2% per barrel in New York yesterday evening.
Prior to that, oil prices showed some signs of steadying as the Delta variant looks set to impact the global economic recovery.
But other factors may come into play which would keep the price of oil down at least somewhat.
The International Energy Agency (IEA) has said that increased demand for oil reversed its path last month and will now move more slowly for the remainder of the year.
“Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use,” the Paris-based IEA said.